New Delhi: Reliance Jio Infocomm’s average fourth-generation (4G) data speeds fell sharply in October to a slower pace than its three biggest rivals as free offers attracted customers and likely affected service quality in most of the newcomer’s markets, a research report by CLSA showed.

Average speeds of Reliance Jio fell in October to 6 Mbps from 7.2 Mbps in September, while market leader Bharti Airtel’s increased to 11.5 Mbps from 11.3 Mbps. For No. 2 telco Vodafone India, speeds fell to 7.3 Mbps from 9.1 Mbps and third-ranked Idea’s rose a tad to 7.7 Mbps from 7.6 Mbps, according to the Hong Kong-based equity research firm, which analysed speed test data from the regulator.

“During October, Bharti Airtel improved 4G speeds and expanded its 4G service to 19 of the total 22 markets. Reliance Jio saw a fall in data speeds across 17 markets,” CLSA said.

Reliance Jio said in a statement that a large proportion of the tests were conducted on its network when speeds were reduced by the daily fair usage policy (FUP), which dragged the average far below the full 4G LTE speeds experienced by its customers.

“With 17 of the 22 (Jio) markets reporting the fall, a quick subscriber ramp-up led by ‘free offers’ (high usage) impacted service quality in most markets. The fall in speeds is higher in data-heavy markets such as Delhi and Mumbai, likely due to higher penetration/usage of 4G services in these markets,” CLSA said.

CLSA noted that 4G data speeds were still two to three times higher than 3G, which could continue to drive migration of subscribers to the faster standard. It analysed the Telecom Regulatory Authority of India’s speed test data based on 2.5 million 4G users and 500,000 3G subscribers.

CLSA said if Jio’s 4G speeds do not improve, the Mukesh Ambani-driven newcomer may extend freebies beyond December, adding to the data pricing risks for its rivals.

During the second-half of the current financial year, the brokerage house expects data realisation to decline 30% year-on-year for Airtel and 25% for Idea Cellular compared with a 20% drop in the first half.

It added that the telcos had launched promotional offers to defend their market share in the face of Jio’s launch, hurting data realisation. Jio started commercial services on September 5, offering free voice and data to new customers for a limited period to attract subscribers.

“A 1% further fall in data realisations without any corresponding increase in usage could impact Ebitda (earnings before interest, tax, depreciation and amortisation) by 0.4-0.8% for Bharti Airtel and Idea Cellular, respectively,” the report said.